To get a benchmark idea of how US companies are performing as a whole, we can take do a little comparison that paints a clearer picture.
First, we look at the broad based Russell 3000 ETF – (IWV). The Russell 3000 measures 96 – 98% of investable US equities by market capitalization and includes large-cap, mid-cap, small cap, and some micro cap stocks.
We can then look at the Russell 1000 ETF – (IWB), which measures the 1,000 biggest large-cap US companies, and lastly the Russell 2000 ETF – (IWM), which measures the remaining 2000 mid – small cap companies.
Plot them all on a chart and compare them for a second:
Daily Chart – Russell 3000 (IWV), Russell 1000 (IWB), Russell 2000 (IWM)
Since the middle of May, the mid/small cap Russell 2000 has been losing momentum compared to the broader based Russell 3000 and the largest 1000 US companies/Russell 1000.
Now, let’s work in some individual small cap sectors to get a deeper analysis:
Daily Chart – Russell 3000 vs Russell 2000 + Individual Small Cap Sectors
Shorter term, all Small Cap Sectors increasingly have been losing momentum within the Russell 2000.
So small caps don’t have the momentum overall right now.
Since we know Large Caps have been outperforming Mid-Small-Micro Caps, we can then look within Large Caps to see if “Value” or “Growth” oriented companies are outperforming:
Chart – Russell 1000 Growth (IWF) vs Russell 1000 Value (IWD):
The “Russell Tussle” Leader To Date = Large Cap / Growth. Based on the current market snapshot in time, we want to continue looking for large cap growth leaders (vs smaller caps) on any continued market strength and/or coming out of any near term ”shallow” broader market retracements.
But be careful!
Since last week (June 5th), momentum has been stalling in all three Russell Index measurements. We want to pay close attention to any additional deterioration in the coming week(s) to gauge if markets, recently trading at all time highs, are possibly going into a consolidation and/or retracement mode.
Finally, every 4th Friday in June, the Russell Indexes get their annual “refresh” and are reconstituted.
Traditionally, this day has been one of the highest volume trading days of the year due to institutional investors and funds adjusting their holdings to reflect the updates.
HEADS UP: This year, the date falls on Friday, June 28th.
The Bottom Line: Comparing the Russell indices is a good way to get a feel for the market. Right now, large cap/growth stocks have the momentum.
But be careful, because all three indices have been losing a bit of ground.
Hang tight to see how each index performs coming out of June 28th’s trading day.
See you on the next one,
JB & Serge
